Ch 12 Flashcards
What is a deficit?
It is when the state spends more than it taxes in a year
What does the deficit equal?
the amount of spending minus the amount of taxes
What is the federal debt?
the total amount that the states owe
What is another way the government spends more than they tax is?
by selling bonds to people, companies and to other governments therefore, the government debt is also the total amount of government bonds outstanding
What is the net public debt?
the portion of debt that the U.S. government owes to others
What does the Congressional Budget Office do?
the forecast how the new taxes and spreading will affect the budget
What does the Congressional Budget office use?
1) statistic scoring
2) dynamic scoring
What is the statistic scoring?
it assumes that individuals will not change their behavior if taxation or spending changes
What is the dynamic scoring?
it looks at the effects of pass changes on behaviors to forecast the effects of new legislation
What did WW2 do to our debt?
it gave the U.S. a huge increase in the net public debt; however the GDP rose quicker than the net public debt, so the ratio fell
What happened to our debt in 2008 and why?
debt increased because:
1) falling GDP
2) the $152 billion stimulus pack of 2008
What year is our economy compared to right now?
1950
Historically what was the U.S. government spending about in percentage?
1-2% of the GDP
What percentage to we spend on social programs?
60%
What percentage do we spend on national defense?
20%
